Traditional brick and mortar retailers have been mired in a slump for most of the last year. To change their fortunes, they need to strengthen their core asset — their stores. The majority aren't equipped to compete against pure play e-tailers on their own terms — they don't have e-commerce in their DNA like the Amazons or eBays, they lack the technical skillsets required, and with $260B+ in online sales in the US alone in 2013, it’s too late to put the lid back on Pandora’s Box.
While many view traditional brick and mortar stores as more of an anchor than an advantage, more than 90 percent of retail sales still occur in store. Retailers need to use them to their advantage to push back against e-commerce competition.
Interaction is the Name of the Game
Retailers can improve in-store experiences through emerging technologies which allow interactions with customers on emerging channels like mobile or m-commerce in-store. The main challenge is determining which in store location technology to use. Each technology has its pros and cons.
The ability to engage consumers in store via smartphones — with their permission, of course — so that they are no longer invisible has tremendous upside for their business. For customers to participate there has to be something in it for them. Similar to the Internet, retailers have to give something to get something. But knowing a loyal customer has crossed the threshold without having to wait for them to walk up to the register to buy something seems like a great place to start, especially if they leave the store without purchasing. Expanding these capabilities to make suggestions to those customers based on their location and past purchase history as well as offering incentives seems like a logical evolution.
Let's take a look at some of the tools retailers have at their disposal:
- Bluetooth Low Energy (BLE) Beacons (aka Bluetooth Smart): a wireless, personal area network (PAN) technology using low power, low cost transmitters supported by the latest versions of the major mobile operating systems (e.g. iOS, Android, Windows, etc.) to enable proximity sensing of the device. It uses the same 2.4 GHz radio frequency as classic Bluetooth.
- Wireless Fidelity (WiFi): a wireless, local area network (LAN) technology based on the Institute of Electrical and Electronics Engineers (IEEE) 802.11 standards that enables an electronic device such as a smartphone, tablet, etc. to connect and exchange data with the Internet.
- Global Positioning System (GPS): a space based satellite navigation system that provides location and time information to GPS enabled devices such as smartphones, tablets/laptops, etc. in all weather conditions anywhere on earth where there is an unobstructed line of sight to four or more of the GPS satellites.
- Indoor Mapping: usually based on planograms which are the output of a retail space planning software application that defines where and in what quantity products are placed on shelving units inside a retail store.
- Mobile Wallets: applications on smartphones to store payment, loyalty and gift cards which because of their ubiquity on Android (Google Wallet), iOS (Passbook) and Windows (Wallet) devices can be leveraged to identify the person carrying the device as well as their location.
- Radio Frequency Identification (RFID)/Near Field Communication (NFC): is the wireless non-contact use of radio-frequency electromagnetic fields to transfer data for the purposes of automatically identifying and tracking objects; NFC is based on existing RFID standards.
- Magnetic Field Variations: many animals utilize local variations in the Earth's magnetic field to find their way. These same magnetic variations commonly exist inside buildings and smartphones and can sense and record these variations to map indoor locations.
- Visible Light Communication (VLC): is a data communications medium using light emitting diodes (LEDs) and can be used for ubiquitous computing because light-producing devices such as indoor/outdoor lamps, TVs, traffic signs, commercial displays, car lights, etc. are everywhere.
The Retail Shakeup Will Continue
Given the variety of technologies mentioned, it would seem there won’t be a single solution that dominates, although BLE Beacons are off to an early lead. I suspect that in a few years we'll see a shake-out, no doubt influenced by retail technology solution providers like Apple, Google, IBM, Oracle, etc. I think there’s an opportunity for third party or parties to become the “trusted advisor(s)” that test out these technologies so that retailers don’t have to learn by trial and error which location based technologies work best in their physical environment.
Brick and mortar retail needs to reinvent itself to compete with the e-commerce threat and while price matching and consistent prices across sales channels efforts help, they're not enough. Traditional retailers need to go on the offensive where they have the advantage — and that means their stores. Without this, brick and mortar retailers are going to continue to cede market share and allow the retail landscape to be reshaped by the e-commerce tsunami.
About the Author
Bill Davis helped jump start the e-Commerce revolution in 1994 as the 7th employee at NetMarket which was widely recognized for processing the first secure transaction over the WWW in August of 1994. Since then Bill has been focused on demand and supply chain solutions focusing on multi channel retailing and over the last two plus years evolving to omnichannel retailing. Bill's worked with retailers ranging from Fortune 100 companies to mid size to start ups defining, developing and deploying a variety of retail technology solutions.
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